Accounts 1995

1. ...............is someone or an organization to whom the business owes money

a) Debtor

b) Creditor

c) Retailer

d) Wholesaler

2. Anything that a trader owes to an outsider is called

a) A liability

b) An asset

c) Capital

d) Returns outwards

3. Mukasa converted his vehicle to serve his business. What is the effect of this transaction?

a) It increases assets and reduces liabilities

b) It increases liabilities and reduces capital

c) It reduces liabilities and increases capital

d) It increases assets and capital

4. Given current asset of shs 200,000 and working capital ratio of 21/2: 1 determining the value of the working capital.

a) Shs300,000

b) Shs80,000

c) Shs120,000

d) Shs500,000

5. A firm which is unable to meet its day obligations is said to be

a) Insolvent

b) Bankrupt

c) Broke

d) Deficient

6. A transaction that does not change total assets, total liabilities and total capital is the one like:

a) Selling a liability with some other cash

b) Selling a typewriter at a price equal to its cost

c) The owner investing cash into the business

d) Receiving a loan from a bank

7. When a cheque received from a debtor is deposited in the bank, the banker, makes the following entries:

a) Dr. bank's cash book; Cr. Bank statement

b) Dr. bank statement; Cr. Bank's cash book

c) Dr. debtor's account; Cr. Bank statement

d) Dr. Customer's cash book; Cr. Debtor's account.

8. Which of the following transactions is not record in the journal proper?

a) A second hand furniture sold on credit for shs100,000

b) Purchase on credit of a bicycle for shs200, 000, for carrying charcoal for sale.

c) Goods sold to lubega for shs500,000 debited to lubanga's personal account

d) Purchase on credit of bicycles worth shs1, 200,000 for sale.

9. ..............................is a list of all balances extracted from the ledger.

a) A balance sheet

b) A trial balance

c) An income statement

d) A trading account

10. When initiating a commercial transaction the first document a buyer sends to a seller is called....

a) An order

b) An inquiry

c) An invoice

d) A statement of account

11. ...........is an accounting document that authorizes payment

a) An invoice

b) A receipt

c) A voucher

d) A purchase order

12. The accounting entries for closing stock are

a) Dr. trading account; Cr. Stock account

b) Dr. stock account; Cr. Trading account

c) Dr. trading account; Cr, profit and loss account

d) Dr. profit and loss account; Cr. Stock account

13. A ..................is both a ledger and a book of prime entry

a) Cash book

b) Sales book

c) Returns book

d) Purchases book

14. A cigarette dealer had the following terms of sales; a 10% trade discount, cash discounts of 5% within a week; 3% within two weeks and 1% within a month. If a buyer purchased cigarettes worth shs100,000, calculate how much money he paid, given that paid for them after 15 days

a) Shs87,300

b) Shs97,000

c) Shs99,000

d) Shs89,100

15. From the following particulars determine the cost of sales; sales shs100, 000. Goods available for sale shs 70,000 and closing stock shs20,000

a) Shs30,000

b) Shs50,000

c) Shs80,000

d) Shs100,000

16. Which of the following is an error of principle?

a) A sale of goods to kato entered in katono's account

b) A receipt of shs10,000 from a debtor entered on the credit side of the cash book

c) A payments of shs10,000 to a creditor entered in books as shs1,000

d) A purchase for personal use entered in the purchases account

17. Which of the following methods of depreciation is most appropriate for motor vans?

a) Reducing balance method

b) Percentage method

c) Straight line method

d) Equal installment method

18. From the following particulars, determine the amount to be transferred to the profit and loss account: on 1/1/94 debit balance in salaries account was shs500,000

Jan 20: bought a pick up for business use on credit from General motors for shs 7,500,000

Jan 27: sold credit to sukisa & sons goods worth shs450, 000

Jan 28: paid by cheque star trading co. all that it owed it less 5% cash discount.

Required:

By the use of the general journal only

i. determine the amount of opening capital

ii. Journalize the above transactions.

23. Mukasa, Natukunda and Odipio are partnership. At the end of first year they had the following:

Shs

Capital: Mukasa 160,000

Natukunda 180,000

Odipio 140,000

Gross profit 1,806,000

Rent payable 300,000

Salaries and wages 419,000

Rent receivable 254,000

Furniture and fittings 400,000

Buildings 1,500,000

Drawings: Mukasa 170,000

Natukunda 80,000

Odipio 40,000

Loan to the firm (Natukunda) 200,000

Additional information:

a) Depreciate buildings and furniture and fittings at 15% and 10% respectively.

b) There was no partnership agreement.

Required to:

i. State any three provisions of the 1890 partnership act.

ii. Prepare profit and loss appropriate account

iii. Prepare the partners current accounts.

24. Karika sports club had the following assets and liabilities as at 1/1/1993:

Furniture 120,000

Sports equipment 150,000

Bank deposit 100,000

Subscriptions in arrear 20,000

Subscription in advance 10,000

In addition the following is a summary of the receipts and payments accounts for the year ended 31.12.1993.

DR. CR.

Shs

Balances 1.1.93

Cash 50,000

Subscription: 1993 200,000

1994 15,000

Donations 150,000

Gate receipts 250,000

665,000

Shs

Wages 20,000

Refreshments 100,000

Matches expenses 50,000

Stationery & printing 70,000

Bank charges 15,000

Gratuities to officials 80,000

Deposit account 200,000

Insurance 80,000

Rent 60,000

Balance 10,000

665,000

Additional information:

i. Interest on deposit account was shs15,000

ii. Charge depreciation on all fixed assets at a rate of 20% per annum.

iii. Insurance paid in advance amounted to shs5,000.

iv. Donations are to be capitalized.

v. Credit supplies for refreshments amounted to shs30,000

Required to:

i. Work out the amount of accumulated fund of the club as at 1.1.1993.

ii. Prepare income and expenditure account of the club for the period ended 31.12.1993

iii. Prepare a balance sheet of the club as at 31. 12. 1993.

25. The totals of the trials balance of kasese emporium failed to agree and difference was posted to the suspense account. Later on the following errors were discovered:

i. The sale day book had been under added by shs100,000

ii. The bought day book had been under added by shs58,500

iii. discount worth shs2,700 received from one of the suppliers had been correctly entered in the cash book but not posted to the supplier's account

iv. Discount allowed column in the cash book had been under added by shs9,000

v. Some goods returned to general merchandize ltd had been recorded at a value of shs5,900 in the return's outward book when the value of the goods was actually shs9,500

vi. Wages of shs296,300 had not been posted from the cash book

Required to prepare:

i. Journal entries to show how the above errors would be corrected.

ii. The suspense account showing the original difference in books.

26. a) Distinguish between a reserve and provision

b) The management of Ruteera enterprises ltd maintains an accounting system in which a 5% provision for bad and doubtful debts is maintained on the figures of sundry debtors at any given point of time.

On 1/1/1994 the figure of sundry debtors stood at shs1, 500,000 and that of 31/12/1994 stood at shs2, 000,000. During the trading period the enterprise suffered a loss of shs250, 000 arising from bad debts.

Using the above information you are required to

i. Prepare the provision for bad debts account, bad debts written off account and profit and loss account.